Market sentiment around the EU ETS remained mixed this week as energy fundamentals and geopolitical risks continued to shape price expectations. Analysts warned that EUA prices are likely to remain volatile through 2026 and beyond, reflecting uncertainty around auction supply, policy reforms, and macroeconomic conditions. Natural gas prices declined further despite prolonged cold weather across Europe, easing fuel-cost pressure and limiting the scope for sustained coal-to-gas switching. While colder conditions continue to support heating demand and emissions in the power sector, ample supply and softer gas pricing have tempered near-term upside for EUAs.

On the geopolitical and policy front, India’s expected alignment with CBAM requirements as part of its trade talks with the EU strengthened the long-term integrity of the ETS by reducing carbon leakage risks. Ukraine-US peace talks were postponed to later this week, maintaining regional uncertainty, while Iran’s threat of retaliation against potential US action added to broader global risk sentiment. Overall, persistent weather-driven demand supports short-term EUA stability, but falling gas prices and elevated geopolitical uncertainty are likely to keep prices volatile in line with analysts’ expectations.

Auction volume: 10.75 million EUAs, 1.52 million more than last week.

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Energy Fundamentals

• Gas storage currently sits at 41.1% (January 31, 2026)
• Analysts predict more volatility in EUA prices through 2026 and on
• India will need to abide by CBAM legislation, amidst EU-India trade deal
• Ukraine-US peace talks pushed to Wednesday and Thursday of this week
• Iran threatens retaliation against US if Washington were to strike
• Natural gas prices drop further  
• Europe increased LNG imports increased in January
• Prolonged cold weather across Europe

Investment Funds

• Investment funds decreased their net long position to +112.52m EUAs on January 23rd (vs. +126.02m EUAs on January 16th).
• Gross short positions decreased to -22.33m EUAs (vs  -26.32m EUAs).
• Gross long positions increased to 134.84m EUAs (vs. 153.35m  EUAs).

Market Prices:

• Indicative Dec26 EUA Price: €82.62
• Indicative Spot EUA Price: €80.91
• YTD Spot EUA Price: €86.609
• MTD Spot EUA Price:  € 86.609

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Chart A: December 2026 EUA Price (EUR)

Technical Analysis

Price action in Dec-26 EUAs has continued to weaken this week, with the corrective phase deepening and price slipping further below key short- and medium-term averages. The contract is now trading near the lower Bollinger Band, reflecting sustained downside pressure and limited buying interest on recent rebounds. The MA20 and MA50 have both rolled over and are acting as overhead resistance in the 86.5–87.5 area, while the MA100 continues to rise near 81.0, marking an important medium-term support zone. Additional near-term support is visible around 83.5–84.0, aligned with the lower Bollinger Band and recent reaction lows, with a deeper retracement likely to target the 81.0–82.0 region if this area gives way.

Momentum indicators reinforce this softer tone. RSI has fallen into the high-30s, pointing to increasingly stretched downside conditions, while CCI remains firmly negative, consistent with persistent selling pressure. MACD has turned decisively lower and remains below zero, highlighting that bearish momentum is still building. Overall, the technical backdrop suggests the market remains in a process of adjustment rather than recovery. A sustained move back above the 86.5–87.5 resistance zone would be needed to stabilise sentiment and re-open upside potential, while failure to hold above 83.5 risks extending the retracement toward longer-term trend support.

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Chart B: December 2026 EUA Price (EUR) - Technical

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